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The Best Stocks of the Millennium

They're not the ones we were writing about in 1999.

What have been the best stocks to own in this new millennium, by all accounts the most Britney-filled of all the millennia on record so far? And what, if anything, can we learn by simply running a couple of quick computerized screens to find the answer?

The results are different from any predictions that I recall seeing or hearing when we said goodbye to the old millennium, which, for the purposes of this column (and acknowledging arguments to the contrary), we'll assume ended on Dec. 31, 1999.

This was supposed to be the decade, century, and millennium of Internet shopping, online brokers, biotech, renewable fuels, regenerating limbs, and every other visionary departure from the mundane and antiquated mechanisms that got us through the dark and uneducated times known as the 20th century.

The runners-up ...In terms of the greatest sales growth this century, a lot of those forward-looking companies have indeed been awesome. Unfortunately, they haven't been nearly awesome enough to translate into rewards for late-1999 purchasers of their stocks. Just take a look at the returns from these companies, which have grown sales by more than 20% annually for the past eight-plus years, and which had sales of at least $100 million already in 1999.

Company

8-Year Annualized Revenue Growth Rate

Stock PriceChange Since

Amdocs(NYSE: DOX)

20.8%

(13.2%)

Juniper Networks(Nasdaq: JNPR)

51.4%

(52.3%)

Level 3 Communications(Nasdaq: LVLT)

30.3%

(95.9%)

RealNetworks(Nasdaq: RNWK)

20.1%

(88.4%)

Data from Capital IQ, a division of Standard and Poor's.

These companies are by no means failures. Look at those compounded eight-year growth rates! Juniper provides networking solutions for the top 40 service providers, and 93 members of the Fortune 100 -- but by the time the end of 1999 rolled around, expectations embedded in its stock price required even more growth than it has since achieved.

And the winners are ...So what has done well this millennium? Done well? Forget that! What's done the best?

I ran a screen for the best-performing stocks of the millennium, with the caveat that they had to have share prices of $5 or more at market close on Dec. 31, 1999.

A few companies at the top of the list are household names. This millennium has been very profitable for shareholders of Apple(Nasdaq: AAPL) and Teva Pharmaceutical(Nasdaq: TEVA), for example.

But you'll also see some big winners you may not know. Take a look:

Company

Product

1999 Market Cap

Price Change This Millennium

Itron

Electricity and gas meters

$91.6

1,575%

Lufkin Industries

Oilfield pumping units

$96.0

1,153%

General Cable

Industrial electrical equipment

$262.1

662%

Boston Beer(NYSE: SAM)

Beer

$147.6

544%

Dollar amounts in millions. Data from Capital IQ.

Other industries represented near the top of the list included fastener products, pool supplies, and trucking.

There's nothing special about those results or this particular time frame; the same thing would be shown in nearly any randomly chosen longer-term time frame, including 50- or 60-year periods. When Jeremy Siegel set out to study what companies had been the best investments out of the original S&P 500 lineup from 1957 to 2003, he found that the No. 2 and No. 3 companies started out as producers of glass and cans.

The Foolish conclusionWhat do many of the Millennial Winners have in common? They were small, established, profitable companies producing things that had worked for decades -- largely ignored things, things that don't usually create headlines or dreams of quick riches.

Of course, that's the point. The better-performing companies of nearly any time period will lack fanciful expectations built into their stock prices, but boast a demonstrated history of consistent success, even as tastes, technologies, and markets change.

These are the kinds of companies we look for in Motley Fool Hidden Gems -- small, ignored companies doing unappreciated, profitable things. It's worked out for us so far, and the strategy has solidly outperformed the S&P 500 over the past five years